R&D spending and cyclical fluctuations: putting the \"technology\" in technology shocks

Alison Butler and Michael Pakko

No 1998-020, Working Papers from Federal Reserve Bank of St. Louis

Abstract: We examine the dynamic properties of an endogenous growth model with an explicit R&D sector in order to evaluate its ability to propagate temporary disturbances into persistent fluctuations in macroeconomic variables. We demonstrate that a large proportion of the variability and persistence of measured Solow residuals can be thought of as reflecting the endogenous accumulation and adaptation of technical knowledge rather than simply exogenous processes. By explicitly modeling R&D, we use a framework in which it is possible to explicitly consider the role of technology in \"technology shocks.\"

Keywords: Research; and; development (search for similar items in EconPapers)
Date: 1998
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Citations: View citations in EconPapers (5)

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